SEC Issues Record-Setting Whistleblower Award

Earlier this month, the SEC announced its largest ever whistleblower award – nearly $279 million – which “led to the successful enforcement of SEC and related actions.”  SEC Press Release, accessible here.  The nearly $279 million award is more than double the prior record of $114 million set in 2020.  Further, there have only been three awards above $100 million in the history of the whistleblower program, which was created as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act in 2010 (“Dodd-Frank Act”) and was implemented by the SEC in 2011 (the fourth largest award is $50 million).[1]

The SEC touted the record award as reflective of the success of its whistleblower program and as indicative of “a significant incentive for whistleblowers to come forward with accurate information about potential securities law violations.”  SEC Press Release.

Pursuant to the whistleblower program, the SEC provides monetary awards to those persons who bring “high-quality original information that leads to a Commission enforcement action in which over $1,000,000 in sanctions is ordered”, with awards ranging from 10%-30% of the collected money, pursuant to section 922, 21F(b)(1), of the Dodd-Frank Act.  SEC Office of the Whistleblower, accessible here.  In all, the SEC has boasted a recovery of over $6 billion in financial remedies as a result of enforcement actions stemming from whistleblower tips.    

Since the program was implemented approximately twelve years ago, several amendments have been made.  In 2020, amendments went into effect which were “designed to provide greater clarity to whistleblowers and increase the program’s efficiency and transparency”.  SEC Office of the Whistleblower, accessible here.  Further, in 2022 two amendments went into effect: One rule change permitted the SEC “to pay whistleblowers for their information and assistance in connection with non-SEC actions in additional circumstances” (which appeared to happen here, as reference is made in the Press Release “to the successful enforcement of SEC and related actions” (emphasis added)) while the other “affirm[ed] the Commission’s authority to consider the dollar amount of a potential award for the limited purpose of increasing an award but not to lower an award.”  SEC Office of the Whistleblower.

Although it remains to be seen whether this record-setting award will further incentivize others to come forward and submit tips to the SEC (which may, in turn, lead to potentially successful enforcement actions), such a high award, coupled with the SEC’s ability to pay whistleblowers up to 30% of the collected money and the aforementioned amendments which appear favorable to whistleblowers, reflects the SEC’s willingness and desire to incentivize whistleblowers to come forward with information.  Perhaps it is only a matter of time, then, before this nearly $279 million award gets knocked out of first place.